Radio Address to the Nation on Free and Fair Trade

September 7, 1985

My fellow Americans:

In my last radio address, I discussed my decision not to impose quotas or tariffs on footwear imports. Protectionism, I said, costs consumers billions of dollars, damages the overall economy, and destroys jobs. Instead of closing down markets at home and throwing Americans out of work, we should be stepping up our efforts to open markets abroad and create American jobs by increasing exports. I instructed the United States Trade Representative to begin investigations of unfair trading practices on the part of our trading partners. We have the authority to counter unfair trading practices by initiating investigations, entering negotiations, and taking active countermeasures if those negotiations are unsuccessful.

Therefore, I'm directing the U.S. Trade Representative to start proceedings in three cases of unfair trade: one, against a Korean law that prohibits fair competition of U.S. life and fire insurance firms in the Korean market in direct contradiction of treaty obligations; two, against a Brazilian law that has restricted U.S. exports of computers and related products and squeezed out some American computer firms operating there; and three, against restrictive practices dealing with tobacco products in Japan that unfairly block U.S. entry into that market. I've also ordered acceleration of ongoing efforts to open up Japanese markets in leather and leather footwear and to challenge the European Community's subsidies on canned fruit. On these two cases we're setting a deadline of December 1, 1985. I have directed that a list be prepared of countermeasures which will be taken if these disputes are not resolved by then.

We hope that through these negotiations we will be able to convince our trading partners to stop their unfair trading practices and open those markets that are now closed to American exports. We will take countermeasures only as a last resort, but our trading partners should not doubt our determination to see international trade conducted fairly with the same rules applicable to all. I'm committed to and will continue to fight for fair trade. American exporters and American workers deserve a fair shake abroad, and we intend to see they get it. Our objective will always be to make world trading partnerships freer and fairer for all. So, while we will use our powers as a lever to open closed doors abroad, we will continue to resist protectionist measures that would only raise prices, lock out trade, and destroy the jobs and prosperity trade brings to all. There are no winners in a trade war, only losers.

As we take these important steps to make our trading system freer and fairer, let's also look at the subject of trade in its broader context. Some point to our trade deficit with alarm, but our share of world exports has not declined. In 1980 our share of world exports was just below 12 percent; in 1984 it was just over 12 percent. We have a trade deficit not because exports are declining but because imports are rising at a much more rapid pace. Why? Because our economy is, in a sense, out of balance with many of our trading partners. The strong growth of the U.S. economy has simply not been matched by many countries abroad.

Our tax cuts ignited a noninflationary economic expansion that has put over 8 million Americans to work in the last 33 months alone. In fact, numbers released yesterday showed a dramatic drop in overall unemployment to 6.9 percent, the lowest in 5 years. Contrast that to Europe where a mix of protectionist policies and continued high tax rates have produced economic anemia and where they've actually lost jobs overall in the last 10 years. And many developing countries with massive debts, high taxes, and low or negative growth find it difficult to afford U.S. exports; some look to our strong dollar as the culprit. And, yes, a strong dollar does make it harder for American firms to sell their products abroad, but the strong dollar is a reflection of America's economic strength. Low taxes and low inflation make America an attractive place to invest. We can either balance the trade deficit up by encouraging our trading partners to adopt the high-growth policies of tax cuts and open markets, or we can balance down by adopting the nogrowth policies of tax hikes and protectionism.

The choice is clear. Let's take the high road to prosperity by fighting for an open, free, and fair trading system with our economic partners and by encouraging them to adopt low tax, high employment growth policies. And let's keep our engines of growth humming here at home, too, by passing a new tax plan for America, a fair share tax plan for all.